GOODLETTSVILLE, Tenn. — Dollar General delivered a stronger-than-expected profit in its fiscal first quarter, easing investor concerns after a rough start to the year and sending shares sharply higher in premarket trading Tuesday.
The retailer earned $2.00 per share in the quarter, up 12% from $1.78 a year earlier and well ahead of the $1.89 analysts had forecast, according to FactSet. Revenue came in at $10.79 billion — a modest miss against Wall Street's $10.82 billion estimate — while same-store sales climbed 2% year over year.
Net income rose 13.3% to $444.1 million. Revenue came in at $10.8 billion, up 3.4% year over year — a modest miss against Wall Street's $10.82 billion estimate — while same-store sales climbed 2.0%, driven by a 1.4% increase in customer traffic and a 0.5% rise in average transaction size. Same-store sales grew across all four merchandise categories: consumables, seasonal, apparel, and home products.
"We are pleased with our first-quarter EPS performance, which exceeded our expectations as strong operating margin expansion more than offset the impact of severe winter weather and higher fuel costs," said chief executive officer Todd Vasos.
Gross margin expanded 65 basis points to 31.6% of net sales, aided by higher inventory markups and reduced shrink and inventory damages, even as markdowns and transportation costs increased. Operating profit jumped 10.8% to $638.5 million, and net interest expense fell 26.9% to $47.2 million, reflecting the company's debt reduction efforts. The effective tax rate ticked up to 24.9% from 23.4%, primarily due to expired federal tax credits.
The company generated $716.2 million in cash flow from operations during the quarter and spent $352 million on capital expenditures, including $203 million on store improvements and remodels and $73 million on new store buildouts.
Dollar General opened 190 new U.S. stores and 5 in Mexico during the quarter, while remodeling 659 locations through its Project Renovate program and 711 through Project Elevate. Merchandise inventories held flat at $6.6 billion on an absolute basis, representing a 1.6% decline on a per-store basis — a sign of improved inventory discipline.
For the full fiscal year, the company plans approximately 4,730 real estate projects, including roughly 450 new U.S. stores and 10 in Mexico, alongside about 4,250 remodels and relocations.
The company raised its full-year diluted EPS outlook to $7.20–$7.45, a 10-cent improvement over prior guidance, partly reflecting a lower assumed tax rate of 24.5%. It reiterated net sales growth guidance of 3.7%–4.2% and same-store sales growth of 2.2%–2.7%. Notably, the guidance assumes no share repurchases and excludes any potential impact from tariff refund payments — leaving room for upside if trade policy shifts favorably.
The board also declared a quarterly dividend of $0.59 per share, payable July 21 to holders of record on July 7.
Whether Tuesday's premarket bounce translates into a sustained recovery will likely hinge on whether same-store sales momentum holds through the back half of the year — and on how the broader macroeconomic backdrop, including tariffs and consumer spending pressure, evolves.
